Why a 5-Year Strategy Still Matters

There’s an increasingly popular argument that five-year strategic plans are obsolete. The world changes too quickly, forecasts are unreliable, and your carefully constructed plan will probably be out of date before you reach Year 2.

There’s just one problem with that argument.

A five-year strategy was never supposed to be a five-year prediction.

5-year strategy is more like SatNav

Think about the last time you used SatNav for a long journey.

Before setting off, you entered your destination. The system calculated a route and, critically, told you what to do at the next junction.

Did you believe you'd follow that exact route all the way to your destination?

Probably not.

Traffic builds up. Roads close. You stop for fuel. You decide to take a different route.

Your SatNav senses what has changed and recalculates.

But here's the important part: it can only recalculate because it knows where you're trying to go.

Without a destination, it can't distinguish between a useful diversion and simply getting lost.

Strategy works the same way.

Strategy isn't prediction

When you develop a five-year strategy, you are not claiming to know precisely what your market, competitors, customers or technology will look like five years from now.

You are deciding where you want to go, based on the best evidence available today.

That longer-term destination then helps you answer a much more immediate question:

What should we do now?

Suppose you know that, five years from now, you want your business to operate internationally, serve a fundamentally different customer segment or derive most of its revenue from digital products.

You probably don't know exactly how you'll get there.

But those ambitions may have profound implications for the capabilities you build, people you recruit, technology you invest in and opportunities you pursue this year.

Without the longer-term view, individually sensible short-term decisions can gradually take you somewhere you never intended to go.

Your route should change

This is where traditional strategic planning can go wrong.

Once leaders have invested months developing a strategy, there can be enormous psychological and organisational pressure to stick to it.

But changing the route isn't evidence that the strategy has failed.

Imagine your SatNav warning you about a motorway closure and responding:

"Ignore it. We agreed the route in January."

Ridiculous.

Yet organisations can behave remarkably similarly when new competitors emerge, customer behaviour changes or assumptions prove wrong.

Good strategy therefore needs both direction and adaptation.

You establish a sufficiently long-term destination to guide today's decisions. You identify the best route based on what you currently know. Then you continually monitor your environment, test your assumptions and adjust the route as new information emerges.

Strategy gives adaptation a purpose

There's an important distinction between agility and simply reacting quickly.

If every new development causes you to change direction, you're not necessarily agile. You may just be zigzagging.

A clear longer-term strategy gives you something against which to evaluate change.

Does this new technology help us reach our destination faster?

Has something changed that means we need a different route?

Or has the world changed so fundamentally that we should reconsider the destination itself?

Those are much better questions than simply asking, "What should we do next?"

Plan five years out to act today

The strongest argument for thinking five years ahead isn't that your five-year plan will prove correct.

It's that thinking five years ahead helps you make better decisions today.

Your destination may evolve. Your assumptions certainly will. And the route you eventually travel may look very different from the one you originally plotted.

That's not a failure of strategy.

That's strategy working as it should.

Set the destination. Plan the route. Keep recalculating.

That is exactly the philosophy behind StratNav: strategy shouldn't be a document you create once a year and put on a shelf. It should be a living management process connecting long-term direction with the decisions and execution happening today.

Try StratNav yourself and build a strategy designed to evolve as your world changes.